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Posted at July 15, 2013, by Raleigh Addington, Comments Off on Hernando de Soto discusses the real causes of the Arab Spring

Writing in the UK’s The Spectator, the Peruvian economist and government advisor Hernando de Soto estimates that 380 million Arabs derive most of their income from the ‘shadow economy’.

Research undertaken by de Soto’s Institute for Liberty & Democracy suggests that the principal dynamic behind the Arab Spring was not political protest but a desire among the excluded and landless for economic opportunity. Countries like Egypt have highly bureaucratic and closed economies which continue to leave most small scale entrepreneurs struggling to grow their businesses, and vulnerable to corruption. de Soto argues that if the West really wants to transform the Arab world, countries like the UK should make property rights and the rule of law a condition of their aid programmes.

Posted at May 23, 2013, by Raleigh Addington, Comments Off on Hernando de Soto testifies to the US House Foreign Affair’s Committee

Peruvian pioneering development economist, Hernando de Soto spoke to the US House Foreign Affair’s Committee on “the economic roots of the Arab Spring”, May 21 2013. At a hearing of the Foreign Affairs Committee of the US House of Representatives entitled “The Call for Economic Liberty in the Arab World”, Hernando spent two hours presenting a prepared statement followed by a Q&A session.

He is the president of the Institute of Liberty and Democracy (ILD) which has worked in the MENA (Middle East and North Africa) region for more than 12 years. Hernando told the committee that while most policy makers in the US and Europe see the Arab world revolutions as a problem, he considers it as a solution to economic growth and a contribution to peace in a region. He also described the ILD’s research which had found that MENA economies were “in the midst of a transition from a pre-market to a market order – and the crucial element to the success of that transition was giving ordinary people easy access to legal property rights.”

A few weeks ago Gillian Tett, in the FT Magazine, wrote about how Hernando de Soto, once called “the greatest living economist” by US President Bill Clinton, has been advising the Egypt’s leaders of the Muslim Brotherhood. De Soto disagrees with the suggestion that it was the young and impoverished who kickstarted the Arab Spring. Instead he says that, in Egypt, much of the population has become excluded from the mainstream economy and this was the real root of the problem, which is yet to be solved. Owing to the cost and difficulties associated with working within the system, many budding entrepreneurs choose to function “extralegally”, according to de Soto. He believes that this ‘informal’ economy’s worth is “four times greater than the value of the companies on the Egyptian stock exchange”. One can see why Egypt’s leaders are keen to find a way to re-engage these people within the economy.